At issue is the ability for criminals to use unencrypted card readers to steal full mag-stripe data which can then be use to make fraudulent purchases. Fraudulent card use is a problem for all merchants (and in particular card not present e-commerce merchants) who shoulder the losses.

Square has made headlines shipping hundreds of thousands of free dongles (square card readers that plug into the iPhone jack for swiping cards). In its announcement, VeriFone demonstrates how promulgating cheap readers enables criminals while making the point that the payments industry needs to take card data security seriously.

VeriFone makes the case that “Consumer trust is what's really at stake.” And VeriFone is right in that it is the payment industry’s responsibility to ensure this. Consumers can’t be asked to determine what swipe device is secure.

The letter, video and details of this call to action can be found at a new site launched today: http://sq-skim.com/.